Could Uranium Turn Around In 2019?

December 26, 2018

5:00 am

As global population drastically increases, especially in countries like India and China, power becomes a hot topic very quickly. Nuclear power has a really bad reputation among a lot of people who look at black swan style of events that get loads of news coverage. Nuclear power and uranium are actually a lot better for the environment than coal or oil.

Coal and oil kill the environment slowly and are less effective for energizing huge power grids than nuclear reactors are. This is why China, India and Russia are upping their nuclear programs in a big way, while smaller nations like the US and France are retreating.

The uranium sector performed much better in 2018 than it did in 2017. Although prices started the season slowly, even experiencing a small fall in January, they’ve climbed steadily as March.

A brief drop in January and March kept sentiment in check, but considering that falling to US$21.30 at March, the U3O8 place price has gradually increased — as mentioned, it is up 40 percent because Q2.

In late 2017, Kazakhstan, the world’s top-producing uranium country, declared it would reduce production by 20 percent over three decades. This output reduction was further exacerbated this year, when Cameco declared it’d indefinitely close its McArthur ore mine and Key Lake mill located in the Athabasca Basin region of Saskatchewan.

“We had expected more substantial coal mine production reductions, and we have now seen this with all the reductions being quite significant — especially the closure of Cameco’s Macarthur River, which in petroleum terms would be similar to Saudi shutting off all of its taps,” noted Perry. “What we hadn’t expected was that the demand side could pick up greatly — and this is currently occurring in a significant way.”

While diminished production by the greatest uranium country and the largest uranium mine has helped the U3O8 spot price rally, require from the nuclear industry is driving once-weak costs higher.

“We hit the lows and the rally is beginning. The Chinese reactor builds have been in full swing, and reactor development across the world is increasing because we want base-load, carbon-free electricity.”

Uranium’s Price

Increasing reliance on nuclear energy to electricity cities, submarines and fuel space travel will probably contribute to enhanced demand into the next decade. However, because Alex Holmes, CEO of Plateau Energy Metals (TSX:PLU), pointed out,”I believe we’ve seen a rapid growth in the uranium spot price, [and] we can see it soften initial until it has been strengthen.”

Energy Fuels Vice President Curtis Moore talked about the occasions after the petition launched by his company, which might lead to trade quotas and tariffs on petroleum imports into the country.

“We are very pleased with the fact that this is in fact the first time in our country’s history which the US government initiated a 232 evaluation upon the petition of a private firm,” said Moore. “Upon receipt of this Commerce report, the president could have 90 days to reevaluate a remedy.”

Its probably the American pioneer will consent to the petition’s request.

“If granted, this means that US ethanol manufacturing would need to grow from approximately 1 million pounds per year to about 12 million pounds per year. And this will require uranium prices at levels that encourage those levels of manufacturing,” Moore said.

The purchase price point that uranium manufacturers are referring to is the US$50 to US$70. At this mark, exploration and production should be reenergized globally, and Cameco could restart the McArthur mine.

When the biggest ore producer in Canada decided to shutter its own project, it simultaneously became one of the largest gas buyers, looking to purchase on the spot market to match its contracts.

Add to the addition of quite a few uranium capital, and it’s simple to see why a possible supply crunch may be on the horizon, especially if stockpiles dwindle before costs can strike an appealing threshold.

“These are indications of a market that’s severely out of balance, and we believe it is simply a matter of time before the market adjusts to the authentic value of producing a pound of uranium in more sustainable levels,” added Moore. “We found that this upside correction starting in in 2018, and it could hasten in 2019.”

Japan

These conditions, also Japan’s growing uranium needs, are factors that will contribute to uranium’s performance within the next calendar year.

As stated by Fulpthe 2019 uranium market will likely be punctuated with,”a continuing rise in the spot price; greater need as fresh reactors come on line and much more Western reactors restart and US utilities start to go into the marketplace for long-term contracts”

For Nick Hodge, founder of the Outsider Club the long run of uranium depends on utilities and also enticing place prices.

I believe at a certain point it is going to be just like getting hit by a freight train when the utilities come back into the current market, an extremely rapid ascent. Everyone keeps saying 2019, 2020 — but for now it appears the utilities are content to purchase in the spot market.”Favorable place price movement was not the only advancement from the uranium space throughout 2018. A number of uranium-focused companies advanced projects, made discoveries and watched share price increases within the year.